Wilson Inc wishes to use the revaluation model for this property: $$\begin{array} { | l | r | }
\hline & \text { Before Revaluation } \
\hline \text { Building Gross Value } & 120,000 \
\hline \text { Building Accumulated Depreciation } & 40,000 \
\hline \text { Net carrying value } & 80,000 \
\hline
\end{array}$$ The fair value for the property is $140,000. Using straight-line depreciation and assuming that the property has a remaining depreciable life of 5 years, how much would be booked to accumulated depreciation in the year subsequent to the revaluation?
A)$16,000 debit.
B)$16,000 credit.
C)$28,000 credit.
D)$28,000 debit.

Question

Wilson Inc wishes to use the revaluation model for this property: $$\begin{array} { | l | r | } 
\hline & \text { Before Revaluation } \
\hline \text { Building Gross Value } & 120,000 \
\hline \text { Building Accumulated Depreciation } & 40,000 \
\hline \text { Net carrying value } & 80,000 \
\hline
\end{array}$$ The fair value for the property is $140,000. Using straight-line depreciation and assuming that the property has a remaining depreciable life of 5 years, how much would be booked to accumulated depreciation in the year subsequent to the revaluation?
A)$16,000 debit.
B)$16,000 credit.
C)$28,000 credit.
D)$28,000 debit.

Quizplus · Accepted Answer

After revaluation, the building's new carrying amount is its fair value of $140,000. With a remaining depreciable life of 5 years, annual depreciation is $140,000 / 5 = $28,000. Since revaluation resets the accumulated depreciation account, the first year's depreciation after revaluation would be booked as a $28,000 credit to accumulated depreciation, reflecting the increase in the accumulated depreciation balance due to the depreciation expense for the year.

Wilson Inc Wishes to Use the Revaluation Model for This